Russia’s economy is beginning to feel the impact of sanctions imposed in response to its invasion of Ukraine more acutely. According to the International Monetary Fund’s October forecast, GDP growth in 2025 was expected to come in at 0.6%. New estimates for this year put it slightly higher, at 0.8%. The economy’s stagnation is being driven, among other factors, by lower state budget revenues from oil and gas exports. Yet experts argue that Russians have adapted quickly to the sanctions environment and are coping increasingly well—meaning the country remains prepared to continue its military campaign.
Assessing the condition of Russia’s economy is complex and, as Dr. Szymon Kardaś from the University of Warsaw’s Faculty of Political Science and International Studies and a member of the European Council on Foreign Relations emphasizes, it needs to be viewed from several angles. On the one hand, many indicators point to a worsening state of the economy; on the other, the turbulence has not been as severe as the West might have hoped while expanding sanctions.
“GDP growth last year was probably between 0.5% and 1%, and this trend will most likely continue in the coming years. We are seeing stagnation in many sectors of the Russian economy—especially in the civilian sector—which is the best proof that various sanctions instruments introduced against Russia are working. Real wages are falling, public debt is rising, and the debt of Russia’s regions is increasing,” Dr. Kardaś told Newseria.
According to preliminary data published by Russia’s Ministry of Finance, the state budget deficit in 2025 was around 2.6% of GDP, or 5.6 trillion rubles. In 2024 it stood at 3.4 trillion rubles (1.7% of GDP).
“Data are also coming in from individual companies that are strategically important for the Russian economy. They show that their financial condition deteriorated again in another year of war. This indicates that the situation is becoming more complicated and that four years of war are having a negative effect on the economy,” the ECFR expert stresses. “At the same time, we must remember that over these four years Russia has developed adaptive mechanisms to function under sanctions. Its economy has also been heavily shifted onto a wartime footing, meaning a large part of industry is working to sustain the war against Ukraine. Third, although the energy sector’s situation has become somewhat more complicated, it still generates very significant revenues—both for the Russian budget and for the economy overall.”
Russia’s Ministry of Finance reported that oil and gas revenues last year fell by 23.8% year-on-year to nearly 8.5 trillion rubles. In January 2026, the decline was more than twice as large, exceeding 50%. The ministry cites lower oil prices as the main reason.
“In Poland, analysts often focused on the fact that budget revenues from the so-called oil-and-gas sector fell by a quarter last year. But remember: this is a drop relative to levels that were among the record highs in terms of revenues from this sector. A figure of 8.5 trillion rubles is still a very good result,” Dr. Kardaś argues.
In the last year before the invasion of Ukraine, these revenues amounted to 9.056 trillion rubles.
“It is also worth noting that in 2025 the importance of oil-and-gas revenues in total budget income fell significantly in percentage terms. Typically, they accounted for about 30%, sometimes 40%; last year it was just under 23%,” the expert notes.
In 2025, revenues from sectors other than oil and gas exceeded 28.8 trillion rubles, an increase of 12.6% year-on-year.
“The value of Russia’s hydrocarbon exports remains relatively high. Of course, over the past year the oil price dropped sharply and was well below Russia’s expectations and budget assumptions, but the overall value still allows the Russian Federation to earn from exports,” Dr. Kardaś emphasizes.
According to data from The Russia Fossil Tracker—an export-monitoring tool created by the independent research organization Centre for Research on Energy and Clean Air (CREA)—from February 24, 2022 to February 16, 2026 Russia earned €1.018 trillion from fossil-fuel exports. Oil accounted for 68% of revenues, gas for 20%, and coal for the remaining 12%.
“Russian oil is still flowing and Russians are still making money on it—though of course much less than they would without sanctions, the European embargo, the price cap mechanism, and a whole range of other restrictions. There are still buyers on global and regional markets who purchase Russian oil,” Dr. Kardaś says.
CREA data show that between January 1, 2023 and February 13, 2026 the largest buyers of Russian fossil fuels were China, India, and Turkey. The European Union ranks fourth. The organization adds that in December 2025, 68% of seaborne crude was transported on tankers from the so-called “shadow fleet” under sanctions. In the expert’s view, this illustrates Russia’s growing ability to operate under sanctions.
“Worsening indicators do affect Russian society, but at the same time there is a very high level of resilience to economic hardship. The society apparently has not yet reached a threshold of pain that would translate into a drastic rise in dissatisfaction and could end in some form of protest,” the ECFR expert argues.
According to the independent Levada Center, in January 2026 84% of Russians approved of Vladimir Putin’s actions as head of state. Only 12% disapproved, while 4% gave no answer. However, it should be borne in mind that polling in Russia carries certain risks, as it is conducted under an authoritarian system.
“Much suggests that Russian society is ready to support a confrontation not so much with Ukraine as with the entire West, because that is a very important element of the propaganda machine built around the war. It frames this conflict not as a Russian-Ukrainian war, but as a conflict between Russia and the whole West,” Dr. Kardaś concludes. “Given an economic situation that is worsening but not collapsing, and a social factor that does not appear to threaten the system, it seems that Russians want to continue this war.”
